Sept 29 (Reuters) - Private equity firm Onex Corp
has made the best acquisition offer in an auction for
Save-A-Lot, the discount grocery U.S. retail chain that
Supervalu Inc has been considering divesting, according
to people familiar with the matter.

An outright sale of Save-A-Lot would deprive Supervalu of
one its fastest-growing businesses, but also allow it to focus
on improving profit margins in its wholesale distribution food
business, which has suffered from deflationary price pressures,
lower traffic and customer attrition.

Supervalu is considering a sale of Save-A-Lot to Onex as an
alternative to a spinoff and is expected to make a final
decision on the future of that business in the next two weeks,
the people said on Thursday.

The price that Onex is offering could not be learned, but
sources have previously indicated that Save-A-Lot could be
valued at as much as $1.8 billion. The sources requested
anonymity because the deliberations are confidential.

Supervalu and Onex did not immediately respond to requests
for comment.

Shares of Supervalu were up 8.7 percent at $4.95 in late
morning trading in New York on Thursday, giving the company a
market capitalization of $1.3 billion.

Supervalu, based in Eden Prairie, Minnesota, announced its
intention to spin off Save-A-Lot a year ago. Reuters reported in
December that Supervalu would consider an outright sale of
Save-A-Lot after receiving interest from private equity firms.
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